The swansong of the cheap loan
- 19TH JUNE 2007
If you vowed to sort out your finances this year and have not already taken out a loan to consolidate them then you may have already missed the boat. Only last year you could apply for a loan that had interest of sub-6%. Now, you are lucky to find a loan that has a rate below 7%, and that is just six months on! Imagine what loan rates may be in another six months time!
Loan rates have risen dramatically in 2007 as a result of high street bank’s shrinking profits. One of the main sources of income for banks and lenders was actually payment protection insurance (PPI), which has been investigated by the Financial Services Authority, Office of Fair Trading and the Competition Commission within the past twelve months. These ongoing investigations and the scandal surrounding the protection itself has meant that more consumers are unwilling to take the protection offered.
Loan rates, therefore, seem the logical way to one again ensure a profit at the expense of the average consumer. Debt consolidation loans are much easier to handle because of the fact that you only have to manage one payment, but if the rates go up you may not be any better off.
Either way, it is essential to have payment protection insurance, such as a standalone policy from payment protection specialists British Insurance, in order to make sure that your debts could be covered if you were to fall ill. The rise in rates is such that you would probably be unable to make repayments so it is essential that you have some sort of safety net in place.
